Harry & David's customer focus fuels incredible comeback

When you visit the Harry & David website, you immediately notice three things.

One: You’re suddenly hungry for rosy-golden pears, chocolate truffles and gourmet flavored popcorn.
Two: You appreciate that the website offers customer-friendly ways to shop – by product, category, price, or even by special occasion.
Three: You see that for product after product – across all categories – user reviews average five out of five stars, or pretty darn close.

Not bad for a company that grew from a 240-acre orchard in southwestern Oregon in the early 1900s. Sam Rosenberg’s sons Harry and David, both trained in agriculture at Cornell University, took over the family fruit business in 1914. Innovative marketers, they convinced business partners in Seattle, San Francisco and New York that their “Royal Riviera” pears made excellent corporate gifts. In the process, they pioneered the concepts of selling fruit by mail order and “Fruit of the Month Club” subscriptions.

At Harry & David, we look at our business as having customers to whom we market our products; we don’t look at our business as having products we market to customers.

Paul LazorisakVice President of Customer Relationship Marketing
Harry & David

In spite of the quality and popularity of its products, the gourmet food and gift company suffered during the economic downturn that began in 2008. After several years of double-digit decline in sales and customer file, the company filed for Chapter 11 bankruptcy in March 2011.

But Harry & David not only emerged from bankruptcy – the company achieved double-digit growth in less than two years and became a $300-400 million retailer. How did they do it? By focusing on serving the needs of customers rather than selling products. Paul Lazorisak, Vice President of Customer Relationship Marketing at Harry & David* shares the company’s three-step approach:

Organize your strategic planning around a customer view.
“The first step to customer-centricity is a mindset,” said Lazorisak. “At Harry & David, we look at our business as having customers to whom we market our products; we don’t look at our business as having products we market to customers. That’s a subtle but important distinction. For us, success depends on developing deep customer insights through analysis, modeling and profiling, so we can communicate with our customers at the right time, with the right message and the right offer. Product is extremely important to us, but it’s not the top of the pyramid. The customer is at the top of the pyramid.”Benefits: Illuminates the pathway to customer success, drives balanced scorecard metrics, guides board-level/financial disclosure and forces a multi-year perspective.

Segment your customers for more meaningful relationships.
“We do all sorts of statistical modeling to determine who is the best customer to contact in a specific time period, but that’s only about half of the equation,” said Lazorisak. “The other half of the equation is how are we going to have that conversation? That’s where the segmentation comes in. It’s extremely important that those segments are integrated into campaigns. It determines which versions of emails, catalogs and promotional offers we’re going to send.”Benefits: Drives value to the company and customers by focusing on the customer conversation, the promotional strategy and resources. Improves customer targeting.

Measure the effectiveness of marketing programs over time. Lazorisak shared a report showing the maturation of a cohort of new customers after one, two and three years. The report illustrated how effective the marketing organization was at migrating this group of new customers from low to high value. By simply looking at many of these cohorts next to one another in a report that uses visualizations, it's easy to see whether marketing has improved its ability to increase customer value.Benefits: Focuses attention on long-term growth via customer nurturing; measures marketing's effectiveness versus spending; and lays the foundation for developing loyalty strategies.